The rule
A future interest under the terms of a trust is contingent upon the beneficiary surviving the distribution date. Unless a contrary intent appears in the trust instrument, if a beneficiary of a future interest under the terms of a trust fails to survive the distribution date, and the deceased beneficiary leaves surviving descendants, a substitute gift is created in the beneficiary’s surviving descendants. They take per stirpes the property to which the beneficiary would have been entitled if the beneficiary had survived the distribution date.
Section 736.1106(2), Florida Statutes.
Two separate propositions live in that paragraph, and the first is easy to skim past. A future interest is contingent on surviving the distribution date. Florida does not treat a future interest as vested and transmissible to the beneficiary’s own estate. If they do not live to the distribution date, their interest does not pass under their will.
Then the antilapse rule supplies a substitute, their descendants, taking per stirpes, which is the same default section 736.1103 applies to class gifts.
The section defines distribution date with unusual care, as the time when the future interest is to take effect, which can fall part way through a day, and which refers to when the right to possession or enjoyment arises rather than when any benefit is actually realised.
Turning it off, and the asymmetry that traps people
The section applies unless a contrary intent appears in the trust. Subsection (3) then tells you what counts, and the two halves point in opposite directions.
(a) Words of survivorship attached to a future interest are a sufficient indication of an intent contrary to the application of this section.
(b) A residuary clause in a will is not a sufficient indication of an intent contrary to the application of this section, whether or not the will specifically provides that lapsed or failed devises are to pass under the residuary clause.
Section 736.1106(3), Florida Statutes.
Words of survivorship are enough. Three words in a trust, if she survives, and the substitute gift never arises. The share goes wherever the trust otherwise directs.
A residuary clause is not enough, and the statute goes out of its way to say so even where the residuary clause expressly sweeps up lapsed and failed gifts. That is a deliberate choice. A residuary clause is boilerplate in almost every document, and treating it as an opt out would repeal the section by accident in every case.
For anyone drafting, the message is that the default is easy to displace but you have to displace it at the gift, not in a general clause elsewhere.
The dates, and a trust that fell through the gap
This is the part with real teeth, and it produced the one Florida decision on the section.
A living trust had been executed in August 2000 and became irrevocable in September 2004. The settlor’s wife, a beneficiary, died before him. Her estate said her interest had vested; his estate said it lapsed. The Fourth District began by working out which law even applied.
First, we note that the common law controls this case. Section 736.1106(2), Florida Statutes, Florida’s antilapse statute, applies only to trusts which became irrevocable on or after July 1, 2009. Section 737.6035(2)(c), Florida Statutes, Florida’s previous antilapse statute, applied only to trusts executed on or after June 12, 2003. The James E. Hughes Living Trust was executed in August of 2000 and became irrevocable in September of 2004. Thus, neither statute controls.
Darian v. Weymouth, 76 So. 3d 15 (Fla. 4th DCA 2011).
Executed too early for one statute and made irrevocable too early for the other. The trust fell between them and the case was decided on common law, under which the creation of a living trust does not by itself vest the interests it provides.
One caution about that quotation, and it is the reason we are quoting rather than paraphrasing. The court’s statement of the effective date reflects the section as it stood in 2011. The section was amended again in 2014, and the current subsection (6) is worded differently. Subsections (1) to (4) apply to all trusts other than those that were irrevocable before the Code’s effective date, older law continues to apply to trusts executed on or after June 12, 2003, and subsection (5) applies to trusts becoming irrevocable after June 30, 2014.
For a trust that became irrevocable in 2004 the answer is the same either way. For a trust in a different position it may not be, and the version of the statute in force is something to check rather than assume.
If nobody is left
Subsection (4) supplies a waterfall when the substitute gift produces no taker. The property passes first under the donor’s gift in default clause, if the interest was created by exercising a power of appointment. Failing that, and if the trust was created in a nonresiduary devise in the transferor’s will, under the residuary clause of that will. Failing that, to whoever would take the transferor’s intestate estate under the law of the transferor’s domicile, including the state.
The section also defines who the transferor is for a future interest created by exercising a power of appointment. It is the donor if the power was nongeneral, and the donee if it was general.